If multiple insiders at the same organization are buying company stock simultaneously, it’s often worth taking a closer look. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.
In this report, we are going to highlight a cluster buying pattern at Valvoline Inc (VVV:US). Valvoline is an American retail automotive services company that operates and franchises over 1,800 service center locations across the US. It also produces motor oil and lubricants. The company is listed on the New York Stock Exchange and currently has a market cap of around $4.6 billion.
Our data shows that between August 28 and August 30, three insiders at Valvoline bought stock. Those who bought shares were:
Chairman Richard Freeland (2,960 shares @ $33.97 per share)
President (and soon to be CEO) Lori Flees (8,879 shares @ $33.76 per share)
CFO Mary Meixelsperger (6,000 shares @ $33.55 per share)
Combined, the insiders invested around $601K in the company.
What stands out here is that three top-level insiders have purchased stock. All three of these individuals are likely to have a solid understanding of the company’s prospects.
Additionally, two of the insiders, Mr. Freeland and Ms. Flees, have increased the size of their holdings significantly. The former has boosted the size of his holding by 29% while the latter has upped her stake by 238%.
Valvoline recently posted better-than-expected Q3 fiscal 2023 results.
For the quarter, revenue amounted to $376 million, up 19% year on year. Meanwhile, reported income from continuing operations was $64.5 million, up 62%. Earnings per share came in at 43 cents – well above the consensus forecast of 36 cents.
On the back of this performance, the company raised its guidance for 2023 adjusted net income. It now expects $185-$200 million versus previous guidance of $160-$180 million.
It added that it expects to continue buying back shares over the next 12 months.
“The summer drive season is off to a great start and demand for our quick, easy, trusted service remains high. We continue to see strong same store sales growth for both company and franchise stores,” commented Ms. Flees.
In light of these solid results, we see the insider buying as a bullish development.